8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 19, 2006

FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-15181	04-3363001
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

82 Running Hill Road

South Portland, Maine 04106

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (207) 775-8100

Check the appropriate box below if the form 8-k filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On October 19, 2006 we announced consolidated financial results for the quarter ended October 1, 2006. The press release announcing the results is included as Exhibit 99.1 to this report. Additional information about non-GAAP financial measures included in the press release is included in Exhibit 99.2. Each exhibit is incorporated herein by reference.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Fairchild Semiconductor International, Inc.
Date: October 19, 2006	/s/ Robin A. Sawyer
	Robin A. Sawyer Vice President, Corporate Controller (Principal Accounting Officer and Duly Authorized Officer)

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

October 19, 2006

Fairchild Semiconductor:

Patti Olson

Corporate Communications

(207)-775-8728

Email: Patti.Olson@fairchildsemi.com

Fairchild Semiconductor:

Dan Janson

Investor Relations

(207)-775-8660

Email: investor@fairchildsemi.com

Agency Contact:

Barbara Ewen

CHEN PR

(781)-672-3114

Email: bewen@chenpr.com

Fairchild Semiconductor Reports Results for the Third Quarter 2006

• Sales at High End of Guidance Range, up 3% sequentially

• Effective Distribution Channel Management Drives Higher Re-sales and Lower Days of Inventory

Fairchild Semiconductor (NYSE: FCS), the leading global supplier of power semiconductors, today announced results for the third quarter ended October 1, 2006. Fairchild reported third quarter sales of $417.0 million, a 3% increase from the prior quarter and 21% more than the third quarter of 2005.

Fairchild reported third quarter net income of $25.1 million or $0.20 per diluted share compared to a net income of $23.0 million or $0.18 per diluted share in the prior quarter and a net loss of $20.8 million or $0.17 per share in the third quarter of 2005. Gross margin was 30.7%, 10 basis points lower sequentially and 9.9 percentage points higher than in the third quarter of 2005. Included in the third quarter 2006 results is $7.1 million in total equity based compensation in accordance with Statement of Financial Accounting Standards (SFAS) No. 123(R) Share Based Payment.

Fairchild reported third quarter adjusted net income of $30.6 million or $0.25 per diluted share compared to adjusted net income of $28.8 million or $0.23 per diluted share in the prior quarter and an adjusted net loss of $3.0 million or $0.03 per share in the third quarter of 2005. Adjusted net income (loss) excludes amortization of acquisition-related intangibles, restructuring and impairments, net gain on the sale of the LED lamps and displays product line, gains from lawsuit settlements, recovery of equity investments, accelerated depreciation on assets to be abandoned and associated net tax benefits of these items and other acquisition-related intangibles. Adjusted results include equity based compensation expense in 2006.

“We reported another solid quarter of sales growth paced by continued strong demand for our power products,” said Mark Thompson, Fairchild’s president and CEO. “Our high and low power switches within the Functional Power Group as well as power conversion and analog switch products in our Analog Products Group all reported 5% or greater sequential revenue growth for the quarter. Our analog switch product line posted another record quarter for sales, up more than 45% from the year ago quarter.

End Markets and Channel Activity

“Sales were at or above the prior quarter levels for virtually all end markets with particular strength in products supporting the computing and consumer end markets,” said Thompson. “Order rates were seasonally slower in the summer months and then improved in late August and September.

“We continue to show steady gains in distribution re-sales,” stated Thompson. “Channel re-sales increased more than 3% sequentially in the third quarter and were 8% higher than a year ago. We tightly controlled our sales into the channel to track this increase in re-sales which resulted in a slight reduction in weeks of supply of our product at the distributors.”

Utilization and Lead Times

“Blended utilization rates remained roughly at our target levels during the third quarter,” stated Thompson. “We continue to selectively add capacity to support growth and to maintain more stable lead times for higher margin analog and functional power products. Lead times increased a few weeks by late summer, but we were able to manage them back down to the 10 – 12 week range by the end of the third quarter.”

Third Quarter Financials

“Solid top line growth helped us to deliver more than a 6% sequential increase in adjusted net income,” said Mark Frey, Fairchild’s executive vice president and CFO. “Gross margins were approximately flat to the prior quarter. R&D and SG&A expenses were also roughly in-line with our guidance. Our tax rate was 11% due to the recognition of a $2.4 million tax benefit for the revaluation of certain foreign tax assets and liabilities.

“Turning to the balance sheet, internal inventories increased slightly more than the level required to support our higher shipping rate, growing by about three days of inventory,” stated Frey. “Consequently, we have already adjusted our build plan to reduce internal inventories in the fourth quarter. Our strong sales growth and disciplined spending allowed us to generate $62 million in cash from operations, increasing our cash and marketable securities balance by $33 million to $556 million at the end of the third quarter.”

Fourth Quarter Guidance

“We anticipate that fourth quarter revenues will be flat to up 2% sequentially,” said Frey. “We expect gross margins to be 50 to 200 basis points lower sequentially as we work to reduce internal inventories, especially for our analog products, during the fourth quarter to better position us for the first half of 2007. We begin the fourth quarter with slightly more backlog than a quarter ago and we forecast distribution re-sales to increase about 2% sequentially which should enable us to grow revenues again this quarter. We expect R&D and SG&A spending, including equity based compensation, to remain at about 21.0 – 21.5% of sales for the fourth quarter. Equity based compensation expense is forecast to be between $6 to 7 million.”

This press release includes references to adjusted net income (loss) (which excludes amortization of acquisition-related intangibles, restructuring and impairments, net gain on the sale of the LED lamps and displays product line, gains from lawsuit settlements, recovery of equity investments, accelerated depreciation on assets to be abandoned and associated net tax benefits of these items and other acquisition-related intangibles), statements of operations prepared in accordance with generally accepted accounting principles (GAAP) (which include these expenses and other items), and a reconciliation from adjusted net income (loss) to GAAP net income (loss). GAAP and adjusted results both include equity

based compensation expense. Adjusted results are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. Fairchild presents adjusted results because its management uses them as additional measures of the company’s operating performance, and management believes adjusted financial information is useful to investors because it illuminates underlying operational trends by excluding significant non-recurring or otherwise unusual transactions. Fairchild’s criteria for determining adjusted results may differ from methods used by other companies, and should not be regarded as a replacement for corresponding GAAP measures.

Special Note on Forward Looking Statements:

Some of the paragraphs above contain forward-looking statements that are based on management’s assumptions and expectations and that involve risk and uncertainty. Other forward-looking statements may also be found in this news release. Forward-looking statements usually, but do not always, contain forward-looking terminology such as “we believe,” “we expect,” or “we anticipate,” or refer to management’s expectations about Fairchild’s future performance. Many factors could cause actual results to differ materially from those expressed in forward-looking statements. Among these factors are the following: changes in overall global or regional economic conditions; changes in demand for our products; changes in inventories at our customers and distributors; technological and product development risks, including the risks of failing to maintain the right to use some technologies or failing to adequately protect our own intellectual property against misappropriation or infringement; availability of manufacturing capacity; the risk of production delays; availability of raw materials; competitors’ actions; loss of key customers, including but not limited to distributors; the inability to attract and retain key management and other employees; order cancellations or reduced bookings; changes in manufacturing yields or output; risks related to warranty and product liability claims; risks inherent in doing business internationally; changes in tax regulations or the migration of profits from low tax jurisdictions to higher tax jurisdictions; regulatory risks and significant litigation. These and other risk factors are discussed in the company’s quarterly and annual reports filed with the Securities and Exchange Commission (SEC) and available at the Investor Relations section of Fairchild Semiconductor’s web site at investor.fairchildsemi.com or the SEC’s web site at www.sec.gov.

About Fairchild Semiconductor:

Fairchild Semiconductor (NYSE: FCS) is the leading global supplier of high-performance power products critical to today’s leading electronic applications in the computing, communications, consumer, industrial and automotive segments. As The Power Franchise^®, Fairchild offers the industry’s broadest portfolio of components that optimize system power. Fairchild’s 9,000 employees design, manufacture and market power, analog & mixed signal, interface, logic, and optoelectronics products. Please contact us on the web at www.fairchildsemi.com.

Fairchild Semiconductor International, Inc.

Consolidated Statements of Operations

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended									Nine Months Ended
	October 1, 2006			July 2, 2006			September 25, 2005			October 1, 2006			September 25, 2005
Total revenue	$	417.0		$	406.3		$	345.5		$	1,232.8		$	1,054.3
Cost of sales (1)		289.1			281.3			273.8			857.4			829.9
Gross profit		127.9			125.0			71.7			375.4			224.4
Gross profit %		30.7	%		30.8	%		20.8	%		30.5	%		21.3	%
Operating expenses:
Research and development (2)		28.5			26.3			19.7			81.0			58.2
Selling, general and administrative (3)		61.4			60.3			51.8			181.7			146.7
Amortization of acquisition-related intangibles		5.9			5.8			5.9			17.6			18.1
Restructuring and impairments		—			—			4.2			—			12.2
Gain on sale of product line, net		(1.1	)		(1.7	)		—			(6.0	)		—
Total operating expenses		94.7			90.7			81.6			274.3			235.2
Operating income (loss)		33.2			34.3			(9.9	)		101.1			(10.8	)
Interest expense, net		5.4			5.5			6.1			16.8			22.1
Other expense (income)		(0.5	)		0.1			(3.4	)		(0.4	)		20.5
Income (loss) before income taxes		28.3			28.7			(12.6	)		84.7			(53.4	)
Provision for income taxes		3.2			5.7			8.2			10.0			183.1
Net income (loss)	$	25.1		$	23.0		$	(20.8	)	$	74.7		$	(236.5	)
Net income (loss) per common share:
Basic	$	0.20		$	0.19		$	(0.17	)	$	0.61		$	(1.97	)
Diluted	$	0.20		$	0.18		$	(0.17	)	$	0.60		$	(1.97	)
Weighted average common shares:
Basic		122.5			122.2			120.0			121.8			119.9
Diluted		124.5			124.6			120.0			124.0			119.9

(1) Includes $1.7 million, $4.1 million and $1.7 million of equity compensation expense for the three and nine months ended October 1, 2006 and three months ended July 2, 2006, respectively.

(2) Includes $1.1 million, $3.4 million and $1.3 million of equity compensation expense for the three and nine months ended October 1, 2006 and three months ended July 2, 2006, respectively.

(3) Includes $4.3 million, $12.5 million and $4.6 million of equity compensation expense for the three and nine months ended October 1, 2006 and three months ended July 2, 2006, respectively.

Fairchild Semiconductor International, Inc.

Reconciliation of Net Income (Loss) To Adjusted Net Income (Loss)

(In millions)

(Unaudited)

	Three Months Ended									Nine Months Ended
	October 1, 2006			July 2, 2006			September 25, 2005			October 1, 2006			September 25, 2005
Net income (loss)	$	25.1		$	23.0		$	(20.8	)	$	74.7		$	(236.5	)
Adjustments to reconcile net income (loss) to adjusted net income (loss):
Restructuring and impairments		—			—			4.2			—			12.2
Costs associated with the redemption of 10 1/2% Notes		—			—			—			—			23.9
Recovery on equity investments		—			—			(0.7	)		—			(0.7	)
Accelerated depreciation on assets to be abandoned		—			—			5.0			—			5.0
Litigation settlement received, net		—			—			(2.7	)		—			(2.7	)
Gain on sale of product line, net		(1.1	)		(1.7	)		—			(6.0	)		—
Amortization of acquisition-related intangibles		5.9			5.8			5.9			17.6			18.1
Associated tax effects of the above and other acquisition intangibles		0.7			1.7			6.1			2.2			(7.3	)
Reserve for deferred tax asset		—			—			—			—			195.3
Tax benefits from finalized tax filings and audit outcomes		—			—			—			(3.5	)		—
Adjusted net income (loss)	$	30.6		$	28.8		$	(3.0	)	$	85.0		$	7.3
Adjusted net income (loss) per common share:
Basic	$	0.25		$	0.24		$	(0.03	)	$	0.70		$	0.06
Diluted	$	0.25		$	0.23		$	(0.03	)	$	0.69		$	0.06

Adjusted net income (loss) and adjusted net income (loss) per share should not be considered as alternatives to net income (loss), net income (loss) per share or other measures of consolidated operations and cash flow data prepared in accordance with accounting principles generally accepted in the United States of America, as indicators of our operating performance, or as alternatives to cash flow as a measure of liquidity. Adjusted consolidated statements of operations are intended to present the company’s operating results, excluding items described above, for the periods presented.

Fairchild Semiconductor International, Inc.

Consolidated Balance Sheets

(In millions)

(Unaudited)

	October 1, 2006		July 2, 2006		December 25, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	519.5	$	349.9	$	330.7
Short-term marketable securities		34.5		164.3		182.5
Receivables, net		160.9		161.3		128.6
Inventories (1)		242.7		230.7		200.5
Other current assets		41.2		39.8		32.2
Total current assets		998.8		946.0		874.5
Property, plant and equipment, net		646.5		641.6		635.0
Intangible assets, net		109.5		115.4		126.1
Goodwill		229.9		229.9		229.9
Long-term marketable securities		2.0		8.7		32.7
Other assets		32.0		33.2		30.1
Total assets	$	2,018.7	$	1,974.8	$	1,928.3
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	3.8	$	2.8	$	5.6
Accounts payable		101.8		121.7		95.2
Accrued expenses and other current liabilities		154.6		123.1		128.9
Total current liabilities		260.2		247.6		229.7
Long-term debt, less current portion		589.7		591.6		641.0
Other liabilities		51.8		51.0		49.1
Total liabilities		901.7		890.2		919.8
Temporary equity - deferred stock units		1.9		1.4		—
Total stockholders’ equity		1,115.1		1,083.2		1,008.5
Total liabilities, temporary equity and stockholders’ equity	$	2,018.7	$	1,974.8	$	1,928.3

(1) For the quarter ended October 1, 2006 and July 2, 2006, includes $0.8 and $0.9 million, respectively of equity compensation capitalized cost.

Fairchild Semiconductor International, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

	Three Months Ended			Nine Months Ended
	October 1, 2006			October 1, 2006			September 25, 2005
Cash flows from operating activities:
Net income (loss)	$	25.1		$	74.7		$	(236.5	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization		29.4			86.4			121.0
Non-cash stock-based compensation expense		7.1			20.0			—
Non-cash restructuring and impairments expense		—			—			4.2
Deferred income taxes, net		(1.2	)		(0.1	)		177.1
Other		(0.5	)		(3.7	)		11.4
Changes in operating assets and liabilities, net of acquisitions		1.8			(49.7	)		7.9
Cash provided by operating activities		61.7			127.6			85.1
Cash flows from investing activities:
Capital expenditures		(29.0	)		(85.6	)		(71.9	)
Purchase of marketable securities		(22.5	)		(117.1	)		(472.1	)
Sale of marketable securities		129.1			245.9			825.4
Maturity of marketable securities		30.4			50.1			20.6
Other		0.4			5.1			(1.8	)
Cash provided by investing activities		108.4			98.4			300.2
Cash flows from financing activities:
Repayment of long-term debt		(0.9	)		(53.1	)		(355.3	)
Issuance of long-term debt		—			—			154.5
Proceeds from issuance of common stock and from exercise of stock options, net		3.6			24.5			10.4
Other		(3.2	)		(8.6	)		(7.0	)
Cash used in financing activities		(0.5	)		(37.2	)		(197.4	)
Net change in cash and cash equivalents		169.6			188.8			187.9
Cash and cash equivalents at beginning of period		349.9			330.7			146.3
Cash and cash equivalents at end of period	$	519.5		$	519.5		$	334.2

EX-99.2

Exhibit 99.2

Information About Our Non-GAAP Financial Measures

Regulation G and other provisions of the securities laws regulate the use of financial measures that are not prepared in accordance with generally accepted accounting principles (we refer to such measures as “non-GAAP financial measures”). In the press release included in this current report on Form 8-K, we provide information on “adjusted net income (loss)” and the related “adjusted earnings per share” (or “adjusted EPS”), each of which is a non-GAAP financial measure.

We believe these measures provide important supplemental information to investors. We use these measures, together with GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations that – when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide in our press releases – provide a more complete understanding of factors and trends affecting our business. We strongly encourage you to review all of our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

For information about our financial results as reported in accordance with GAAP, see Item 8 of Part II, “Consolidated Financial Statements and Supplementary Data” in our annual report on Form 10-K for the year ended December 25, 2005. For a quantitative reconciliation of our non-GAAP financial measures to the most comparable GAAP measures, see “Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)” in Exhibit 99.1 included in this current report on Form 8-K.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names.

Items That We Exclude from Adjusted Net Income (Loss)

Adjusted net income (loss), which we reconcile to net income (loss), excludes the following items:

• restructuring and impairments,

• distributor sales reserves and inventory charges associated with product discontinuations,

• costs associated with early retirement of debt,

• purchased in-process research and development,

• a gain or loss on the sale of a product line,

• amortization of acquisition-related intangibles,

• certain charges relating to potential losses from customer claims,

• write off (recovery) of equity investments,

• lawsuit settlement gains,

• accelerated depreciation on assets to be abandoned,

• the tax effects associated with the above and other acquisition intangibles,

• tax benefits from finalized tax filings and audit outcomes,

• reserve for deferred tax assets, and

• repatriation tax effect.

Not all of these items are necessarily included in the calculation of net income (loss) each quarter. To understand which of the above items are included in the calculation of net income (loss), and excluded from the calculation of adjusted net income (loss), see the reconciliation data in Exhibit 99.1 included in this current report on Form 8-K.

Adjusted EPS is derived from adjusted net income (loss), using the same measures of outstanding shares as are used to calculate net income (loss) per share in accordance with GAAP.

We use adjusted net income (loss) to manage and evaluate our business operations and overall financial performance because it excludes some cash and non-cash items that are either beyond our immediate control or are not characteristic of our underlying business operations for the periods in which they are recorded, or both.

We exclude these items for the following reasons:

• We believe such charges do not reflect results of our ongoing operations.

• We believe that, since such charges are not recorded in all periods, excluding them provides better comparability of our results of operations from period-to-period.

• Adjusted results provide an additional measure that our stockholders and debtholders have requested and expect as a means to project future results of operations.

• Although, for the reasons given above, our adjusted results may not be directly comparable with those of other companies, we believe they provide an additional point of comparison (particularly when viewed in the context of the reconciling data that we also provide) that investors may use to compare us with other companies in our industry, many of which also provide non-GAAP financial measures or highlight certain charges in their GAAP presentations.

• For comparison and projection purposes, GAAP measures alone may not provide all information that an investor may wish to consider. For example, amortization of acquisition-related intangibles, included in the GAAP measure, would be higher for a company that has grown through acquisitions than for a company that has grown internally. Excluding and explaining such charges as part of the presentation of the non-GAAP financial measure provides additional information for an investor to use, together with the GAAP measure, in comparing the performance of the two companies.